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Comment: Minimum prices ad absurdum?

Jan Gruber June 9, 2020 11:50

"For the sake of the environment," Austria's government wants to introduce minimum prices for airline tickets. But the plans do not seem to be fully developed yet. A comment on current events. The events of Monday have reshuffled the cards at Austria's aviation location: Ryanair subsidiary Lauda will keep its base in Vienna open, albeit on a smaller scale. Instead of 16 Airbus A320s, ten aircraft will be used from August. The Republic of Austria will give Austrian Airlines financial support. The government announced a rescue package worth millions, which will be financed in cooperation with Lufthansa and Austrian banks. The adjustment of the ticket tax to a uniform 2021 euros, originally planned for 12, is now being brought forward, but this is unlikely to really bring about changes in the market. The anti-dumping regulation presented by the government is more likely to change the market. In future, there will no longer be any tickets under around 40 euros. Specifically, the government said that tickets may no longer be sold below the price of the taxes and fees and the ticket tax. This has an impact on low-cost offers, especially from Wizzair and Lauda, ​​which often sell tickets starting at 9,99 euros. If the government's plans can be implemented as presented, the cheapest ticket would cost 40 euros one way in the future. However, it seems questionable to what extent such an anti-dumping regulation can be enforced within the European Union. It is a gross infringement on the entrepreneurial freedom to set prices. It would therefore not be surprising if one or two providers took legal action against the new law, which has not yet been passed by the National Council.

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Leonore Gewessler: “No tickets under 40 euros”

Jan Gruber June 8, 2020 17:45

In future, there will no longer be any tickets in Austria for less than 40 euros. It is not yet clear how the low-cost airlines will react to this. Transport Minister Leonore Gewessler announced that in future, flight tickets must be sold at least at the price of taxes, fees and ticket levy. The approximate minimum price should be around 40 euros one way. Across Europe, the airline sees itself as a pioneer in this respect. The ticket levy will not be raised next year, but immediately to 12 euros. Another new development is that for flights that are less than 250 kilometers long, a ticket tax of 30 euros will be charged. The "anti-dumping regulation" is to be regulated in concrete terms in the new airport charges law. In concrete terms, this means that cheap tickets of 9,99 euros and less will no longer be permitted in the future. It is not yet clear whether the low-cost airlines intend to take legal action against the federal government's plan. In any case, it is likely to be a significant infringement on companies' freedom to set prices.

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“For AUA” – State wants to increase ticket prices

Jan Gruber June 8, 2020 17:38

AUA is being rescued by the state, but as a protective measure against low-cost airlines such as Wizzair and AUA, tickets will in future cost at least 40 euros. The air ticket tax is to be increased immediately to 12 euros and even to 250 euros on routes under 30 kilometers. The Lufthansa Group has managed to secure a total of 600 million euros for its subsidiary Austrian Airlines. 150 million euros will be transferred by the Republic of Austria as "damage cover". The parent company Lufthansa will provide an amount of the same amount. 300 million euros will be taken out in the form of a bank loan. This must be repaid by 2026. The federal government is linking the granting of 150 million euros "to cover damage resulting from the COVID-19 crisis" to ecological requirements, location guarantees and other securities. The entire aid package is dependent on state aid in Germany for Lufthansa, the approval of all committees and the approval of the EU Commission. Federal Chancellor Sebastian Kurz said that Vienna will grow just as strongly as Munich and Frankfurt in the future. The Lufthansa Group has committed itself to this. The 150 million euros that the state is making available come directly from the tax pot, he said. "Austrian Airlines was and is an elementary part of the Lufthansa Group's multi-hub strategy. With this package and in combination with the improved framework conditions of the Austrian aviation system partners, Austrian Airlines can rebuild the hub in Vienna after the crisis and connect Austria with important destinations in Europe and around the world," says Carsten Spohr, CEO of the Lufthansa Group. According to Austrian Airlines, short-haul flights will increasingly be based on the

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Lauda base Vienna will restart on July 1, 2020

Jan Gruber June 8, 2020 16:56

After a long struggle over the future of the Lauda base in Vienna, there is now clarity: operations will continue with ten Airbus A320s. Anyone who did not vote for the new collective agreement or who used the wording of the controversial works council must now fear for their job. The Lauda base in Vienna will definitely not be closed, but will gradually resume flight operations from July 1, 2020. The group's sister company Ryanair DAC will therefore not take over the "OE routes", but these will continue to be served with Lauda's Airbus A320s. The company announced this on Monday afternoon. However, due to the consequences of the corona pandemic, the number of aircraft stationed in Vienna will be reduced from 16 to ten A320s, at least for the time being. In this context, there will also be a reduction in staff. A circular from Saturday also gives an indication of which group of people could be affected, because it said that the jobs of those employees who agree to the new collective agreement will be saved. Conversely, this could mean that those Lauda employees who did not give their consent or who used wording from the works council not recognized by the company will continue to have to fear for their jobs. There is, of course, no official confirmation of this. According to the company's statement, 90 percent of pilots and 66 percent of flight attendants have accepted the new collective agreement and the conditions contained therein. This consent prompted the owner, Ryanair Holdings PLC, to reverse the decision to close the Vienna base. Flight operations will start on July 1, 2020 with an initial three Airbus A320s and by August

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AUA pensions put pressure on finances

Jan Gruber June 8, 2020 12:11

In the last balance sheet, 120 million euros were set aside for additional contributions to the pensions of around 160 employees. According to Kurier, those affected are not even thinking about making their contribution to saving the carrier. The planned state aid for the Lufthansa subsidiary Austrian Airlines has been the subject of extremely controversial discussions in recent weeks. Opinions range from "the Germans should pay" to the claim that the carrier is "systemically important" and that the entire economy could even collapse without Austrian Airlines. Almost unnoticed by the public, AUA is making provisions of 120 million euros for just 160 pensioners, as the daily newspaper Kurier revealed. The media outlet writes that around 7.000 employees are contributing to the maintenance of the carrier by reducing their salaries, but at the same time around 160 "privileged individuals" are not even thinking about making their contribution to saving the company. These are former managers who, according to Kurier, "receive a few thousand euros a month in company pensions" in addition to their regular ASVG pension. These company pensions are to be based on individual contracts with corresponding pension commitments and are to be guaranteed, regardless of the pension fund's investment results. Put simply, this means that if the economic success of the investment is lower than the contractual entitlement, Austrian Airlines must make up the difference, according to the media report. The Kurier writes that 120 million euros were set aside for this increase in the previous year's balance sheet and that the sum has been rising sharply for several years. The reason for this is that the pension fund's performance has been below average for some time. This leads

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Airports: Germany before wearing a mask

Jan Gruber June 7, 2020 20:16

Masks must be worn at one German airport, but not at another. That is now set to change. In Germany, a general mask requirement could soon be introduced at airports. So far, there is no such requirement nationwide, as such orders are in principle a matter for the federal states, which has also contributed significantly to the patchwork of extremely different corona measures in the individual federal states. According to information from the news magazine "Der Spiegel", the authorities and operators of airports are currently expecting a significant increase in passenger numbers. A current paper states that the mask requirement appears necessary because the so-called safety distance cannot be maintained in many areas. According to "Spiegel", this primarily concerns the areas of security checks, shuttle and apron buses, and baggage claim. Remarkably, boarding and disembarking are not mentioned at all. Due to Germany's federal structure, the federal government is not in a position to announce a general mask requirement. This means that the orders are made by the respective state governments. Votes are now being held on this. The “Spiegel” expects that the measure will become mandatory in the next few days.

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Lion Air back on the ground after comeback

Jan Gruber June 7, 2020 18:15

After only five days, Lion Air's planes are grounded again. It is almost impossible for passengers to meet the strict conditions of the Indonesian government. The "corona comeback" of the Indonesian low-cost airline Lion Air literally went wrong. After only five days, the carrier stopped flight operations again on Friday. According to a company statement, this also applies to the subsidiaries Batik Air and Wings Air. The carrier announced that many passengers cannot take their booked flights because they cannot meet the government's strict rules. Proof and documents cannot be presented. Therefore, the actual capacity utilization was evaluated and the decision was made to suspend flight operations again, Lion Air said in a press release.

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Quarantine: IAG and Ryanair are suing

Jan Gruber June 7, 2020 14:21

Ryanair and IAG want to file a joint lawsuit against the United Kingdom's new quarantine regulations. Others are opening, the UK is closing. While numerous EU countries are currently in the process of relaxing their entry regulations and largely waiving 14-day quarantine or the presentation of negative corona tests, the United Kingdom is introducing exactly this on Monday. IAG, which has a subsidiary there, British Airways, and Ryanair now want to file a lawsuit against it. Willie Walsh, General Director of the International Airlines Group, told Skynews that the UK government's measure is "disproportionate". As a result, the group would not be able to ramp up its flight program from July 2020. Ryanair announced shortly afterwards that it would join the International Airlines Group's lawsuit.

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Bombardier cuts 2.500 jobs

Jan Gruber June 7, 2020 13:05

After the three sales of sub-divisions, the Bombardier Group in Canada wants to cut around 2.500 employees in the aviation sector. The background is the Corona crisis. Bombardier has significantly downsized its aviation division in recent years. The C-Series, CRJ and Dash 8-400 series were sold to Airbus, Mitsubishi and Viking. Now around 2.500 jobs are at risk, the company announced on Friday. Production in Canada is primarily affected. The cuts are to be carried out in the course of 2020. In general, major upheavals are on the horizon, as the entire rail division could be sold to Alstom in France.

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Weeze needs financial support

Jan Gruber June 7, 2020 12:41

Last year, Weeze was in the black, but the corona pandemic will probably keep the airport busy for years to come. The city and district are now to provide six million euros in support. The corona crisis is also likely to have put Weeze Airport in financial difficulties, as the airport needs around six million euros in support. This is to be raised by the city and district, reports the Rheinische Post. Managing Director Ludger van Bebber explains in an interview with the media that as a privately financed airport, the airport is not eligible to apply for the NRW Bank's support program. Funds from the Kreditanstalt für Wiederaufbau would probably be available, but long-term loans are needed, not short-term ones. The manager assumes that it will take at least four years before Weeze can reach the 2019 figures again. There is still no signal from the state government that private airports will also be supported. As van Bebber further explained in an interview with the Rheinische Post, main customer Ryanair wants to offer around 2020 percent of the previous capacity in July 50. According to his information, flight operations will gradually be increased to pre-crisis levels. There is no decision yet on the Morocco connections.

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